March 27, 2009
Dear Shareholder:
We are pleased to invite you to attend the Annual Meeting of the Shareholders of Canada
Bread Company, Limited to be held at the Albany Club, 91 King Street East, Toronto,
Ontario at 2:30 p.m. on Wednesday, May 6, 2009. The items of business you will be
asked to act on are set forth in the accompanying Notice of Annual Meeting and
Management Information Circular.
We invite you to read our 2008 Annual Report. The report provides an account of our
performance in 2008 and includes the financial statements for 2008 and management’s
discussion and analysis regarding these statements. In the report, we also review our
progress over the year and outline our plans for 2009 and beyond.
We encourage you to ensure that your shares are represented at the Meeting whether or
not you are able to attend. Your vote is important. If you do not plan to be present, we
would appreciate you taking the time now to sign, date and return the enclosed proxy
form in the enclosed envelope so that your shares can be voted at the Meeting in
accordance with your instructions.
Proxies will be counted and tabulated by Computershare Investor Services Inc., the
transfer agent of Canada Bread Company, Limited.
We thank you for your continuing support of the Company as a shareholder.
Yours very truly,
MICHAEL H. MCCAIN
Chairman of the Board
RICHARD A. LAN
President & Chief Executive Officer
CANADA BREAD COMPANY, LIMITED
10 FOUR SEASONS PLACE, ETOBICOKE, ONTARIO, CANADA M9B 6H7
TELEPHONE: 416-622-2040
CANADA BREAD COMPANY, LIMITED
NOTICE OF THE ANNUAL MEETING OF THE SHAREHOLDERS
TAKE NOTICE that the Annual Meeting of the Shareholders (the “Meeting”) of Canada Bread Company, Limited will
be held at the Albany Club, 91 King Street East, Toronto, Ontario on Wednesday, May 6, 2009 at 2:30 p.m. (Toronto
time) for the following purposes:
(a)
to receive the consolidated financial statements for the year ended December 31, 2008, together with the auditors’
report thereon;
(b)
to elect directors;
(c)
to appoint auditors and authorize the directors to fix their remuneration; and
(d)
to transact such other business as may properly come before the Meeting or any adjournment or adjournments thereof.
The accompanying Management Information Circular dated March 27, 2009 provides additional information concerning
the matters to be dealt with at the Meeting.
DATED at Toronto this 27th day of March, 2009.
By Order of the Board.
R. Cappuccitti
Corporate Secretary
CANADA BREAD COMPANY, LIMITED
MANAGEMENT INFORMATION CIRCULAR
VOTING INFORMATION
SOLICITATION OF PROXIES
This Management Information Circular is furnished in connection with the solicitation by management of Canada
Bread Company, Limited (“Canada Bread” or the “Corporation”) of proxies to be used at the Annual Meeting of the
Shareholders of the Corporation (the “Meeting”) to be held at the Albany Club, 91 King Street East, Toronto, Ontario on
Wednesday, May 6, 2009 at 2:30 p.m. for the purposes set forth in the attached Notice of the Meeting. The costs of such
solicitation will be borne by the Corporation. It is planned that the solicitation will be primarily by mail but proxies may
also be solicited by telephone, in writing, by email, by fax, by other electronic means or in person by employees of the
Corporation or by agents of the Corporation at a nominal and customary cost.
APPOINTMENT AND REVOCATION OF PROXIES
The persons named in the enclosed form of proxy are directors of the Corporation. A shareholder desiring to appoint
some other person or company, who need not be a shareholder of the Corporation, to represent the shareholder at
the Meeting may do so either by inserting such person’s name in the blank space provided in the form of proxy or by
completing another proper form of proxy and, in either case, delivering the completed proxy to the Secretary of the
Corporation, c/o Computershare Investor Services Inc., 100 University Avenue, 9th Floor, Toronto, Ontario M5J 2Y1, for
receipt on or before 4:30 p.m. on the last business day preceding the day of the Meeting or any adjournment thereof at
which the proxy is to be used, or delivering it to the Chairman of the Meeting on the day of the Meeting or any adjournment
thereof prior to the time of voting. A proxy should be executed by the shareholder or his attorney duly authorized in writing
or, if the shareholder is a corporation, by an officer or attorney thereof duly authorized.
In addition to any other manner permitted by law, a proxy may be revoked before it is exercised by depositing an instrument
in writing executed in the same manner as a proxy with the Secretary of the Corporation at the address shown above at
any time up to and including the last business day preceding the day of the Meeting or any adjournment thereof at which
the proxy is to be used or with the Chairman of the Meeting on the day of such Meeting or any adjournment thereof and
upon either of such deposits the proxy is revoked.
VOTING OF PROXIES
A proxy in the form enclosed with the Notice of Meeting confers discretionary authority with respect to amendments or
variations to the matters identified in the Notice of Meeting or other matters that may properly come before the Meeting.
Management of the Corporation is not aware of any amendments, variations or other matters that are to be presented for
action at the Meeting.
Shares represented by proxies properly executed in favour of the persons whose names are printed therein will be
voted for or against or withheld from voting in accordance with the choices specified in the executed proxy on any
ballot that may be called for but, if no choice is specified, such shares will be voted:
(i)
FOR the election as directors of the Corporation of each of the persons listed as nominees under the heading
“Election of Directors” below as directors;
(ii) FOR the appointment of KPMG LLP, Chartered Accountants, as auditors of the Corporation and authorizing
the directors to fix their remuneration; and
(iii) FOR or AGAINST such actions as the nominee thinks fit with respect to any other matter that may properly
come before the Meeting, including any amendments or variations in the matters identified in the Notice
of Meeting.
2009 CANADA BREAD COMPANY, LIMITED MANAGEMENT INFORMATION CIRCULAR
1
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
As at March 10, 2009, the Corporation had 25,416,812 voting common shares (“Common Shares”) outstanding. Each
Common Share carries the right to one vote at the Meeting. To the knowledge of the directors and officers of the
Corporation, the only person who beneficially owns directly or indirectly or exercises control or direction over more than
ten percent (10%) of the votes attaching to the Common Shares is Maple Leaf Foods Inc. (“Maple Leaf Foods”, “Maple
Leaf” or “MLF”) which holds directly or indirectly 22,818,515 Common Shares representing approximately 89.8% of the
issued and outstanding Common Shares. The registered office of Maple Leaf Foods is Suite 1500, 30 St. Clair Avenue
West, Toronto, Ontario M4V 3A2.
The directors have fixed the close of business on April 1, 2009 as the record date for the purposes of determining
shareholders entitled to receive notice of and to vote at the Meeting. Accordingly, only persons who are holders of Common
Shares of record at the close of business on April 1, 2009, or persons who are transferees of Common Shares acquired
after April 1, 2009 and who produce properly endorsed certificates for such Common Shares or otherwise establish
ownership thereof and demand, not later than ten (10) days before the Meeting that the Secretary of the Corporation include
their names in the list of shareholders, are entitled to vote at the Meeting.
NON-REGISTERED SHAREHOLDERS/BENEFICIAL OWNERS
Most shareholders are “beneficial owners’’ who are non-registered shareholders. The Common Shares of the Corporation
held by them are registered in the name of an intermediary, such as a securities broker, financial institution, trustee,
custodian or other nominee who holds the shares on their behalf, or in the name of a clearing agency in which the
intermediary is a participant (such as CDS Clearing and Depository Services Inc.). Intermediaries have obligations to
forward meeting materials to the non-registered holders, unless otherwise instructed by the holder (and as required by
regulation in some cases, despite such instructions).
These security holder materials are being sent to both registered and non-registered shareholders of the Corporation. If
you are a non-registered shareholder and these materials were sent directly to you, your name and address and information
about your holdings of securities have been obtained in accordance with applicable securities regulatory requirements
from the intermediary holding shares on your behalf.
By choosing to send these materials to you directly, Canada Bread Company, Limited (and not the intermediary holding
shares on your behalf) has assumed responsibility for (i) delivering these materials to you, and (ii) executing your proper
voting instructions. Please return your voting instructions as specified in the request for voting instructions. Non-registered
holders should follow the directions of their intermediaries with respect to the procedures to be followed for voting.
Generally, intermediaries will provide non-registered holders with either: (a) a voting instruction form for completion and
execution by the non-registered holder, or enabling voting by alternate means such as telephone or Internet, or (b) a proxy
form, executed by the intermediary and restricted to the number of shares owned by the non-registered holder, but otherwise
uncompleted. These procedures are designed to permit the non-registered holders to direct the voting of the Common
Shares of the Corporation which they beneficially own.
VOTING AT THE MEETING BY BENEFICIAL OWNERS
Only registered shareholders or their duly appointed proxyholders are permitted to vote in person at the Meeting. If a nonregistered holder wishes to attend and vote in person at the Meeting, they must insert their own name in the space provided
for the appointment of a proxyholder on the voting instruction form or proxy form provided by the intermediary and
carefully follow the intermediary’s instructions for return of the executed form or other method of response.
2
2009 CANADA BREAD COMPANY, LIMITED MANAGEMENT INFORMATION CIRCULAR
BUSINESS OF MEETING
ELECTION OF DIRECTORS
The table below sets out the names of the persons proposed for election as directors of the Corporation to serve until the
next Annual Meeting of the Shareholders of the Corporation or until their successors are duly elected or appointed, unless
any such person is not available to act as a director, in which event a substitute may be nominated. The persons named
in the enclosed form of proxy (unless otherwise instructed) intend to vote FOR the election of the nominees whose
names are set forth below.
For each nominee for election as director, the table sets forth as applicable: place of residence; age; present principal
occupation and principal occupations held in the last five years, if different; a brief description of his or her principal
directorships, positions and other relevant information; the date he or she became a director of the Corporation; the number
of common shares beneficially owned(1); current membership on committees of the board of directors of the Corporation
(the “Board”); whether he or she is the Chair of a Committee of the Board; other public board memberships in the past
five years; and, whether he or she is independent within the meaning of applicable securities legislation. Information on
each nominee’s attendance is set out in the table for the respective nominee. For information on director assessment,
selection, orientation and education, and other corporate governance topics, please see the discussion under the heading
“Report on Corporate Governance’’ below.
William E. Aziz
Age: 52
Residence: Oakville,
Ontario, Canada
Director Since 2005
Independent
OCCUPATION: President and Chief Executive Officer, BlueTree Advisors Inc. (private
management advisory firm)
BIOGRAPHY: Through BlueTree, Mr. Aziz is currently providing his services as CRO of
Hollinger Inc. during its restructuring. Mr. Aziz played key roles in the restructurings of Atlas
Cold Storage Income Trust, BiWay Stores division of Dylex, White Rose Home & Garden,
Interlink Freight Systems and Agnew Family Footwear, among others. He is a director of
OMERS, Tecumseh Products Company (where he chairs its Governance and Nominating
Committee and sits on its Audit Committee), and Tanren Group (a private, arbitrage investment
advisory). Mr. Aziz is a graduate of the Richard Ivey School of Business at the University of
Western Ontario in Honours Business Administration and is a Chartered Accountant. He has
also completed the Institute of Corporate Directors Governance College at the Rotman School
of Business, University of Toronto.
CURRENT DIRECTORSHIPS:
DIRECTORSHIPS WITHIN THE PAST 5 YEARS:
OMERS
Tecumseh Products Company
Tanren Corporation
Sun-Times Media Group, Inc.
Doman Industries Limited
Algoma Steel Inc.
No interlocking public company
directorships (3)
BOARD AND COMMITTEE MEMBERSHIPS AND ATTENDANCE:
Board of Directors
Chairman, Audit Committee
100%
100%
SECURITIES HELD(1):
Canada Bread Company, Limited Common Shares
Maple Leaf Foods Inc. Common Shares
0
6,600
2009 CANADA BREAD COMPANY, LIMITED MANAGEMENT INFORMATION CIRCULAR
3
Sarah A. Everett
Age: 56
Residence: Toronto,
Ontario, Canada
Director Since 1995
Independent
OCCUPATION: Chair of the Executive Committee, Royal Canadian Securities Limited (privately
held holding company)
BIOGRAPHY: Ms. Everett is a Director and Chair of the Executive Committee of Royal Canadian
Securities Limited, based in Winnipeg, Manitoba, which together with its subsidiaries is
engaged primarily in retail operations, real estate development and property management.
Ms. Everett has previously held positions in the consumer packaged goods industry and was
the President and Chairman of Domo Gasoline Corporation Ltd., a privately held chain of retail
gasoline outlets. She holds a Bachelor of Arts (Honours) degree from Queen’s University and
a Master of Arts degree from the University of Toronto.
DIRECTORSHIPS WITHIN THE PAST 5 YEARS:
CURRENT DIRECTORSHIPS:
None
None
No interlocking public company
directorships (3)
BOARD AND COMMITTEE MEMBERSHIPS AND ATTENDANCE:
Board of Directors
Audit Committee
Governance Committee
100%
100%
100%
SECURITIES HELD(1):
Canada Bread Company, Limited Common Shares
Maple Leaf Foods Inc. Common Shares
Richard A. Lan
Age: 54
Residence: Chatham,
New Jersey, USA
Director Since 1995
Not Independent
1,600
0
OCCUPATION: President and Chief Executive Officer of the Corporation and Chief Operating
Officer, Food Group, Maple Leaf Foods Inc.
BIOGRAPHY: Mr. Lan joined Maple Leaf Foods Inc. in 1995 and served in several executive
capacities until 2006, when he was appointed its Chief Operating Officer, Food Group. Mr. Lan
received a Bachelor of Science degree in Accounting from the University of Rhode Island. He
was founder and President of Dell Products Corp. until that business was sold to McCain Foods
in 1988. Mr. Lan then assumed the position of President and CEO of McCain Citrus, where he
remained until he joined Maple Leaf Foods Inc. Mr. Lan is a director of the Tim Horton
Children’s Foundation.
DIRECTORSHIPS WITHIN THE PAST 5 YEARS:
CURRENT DIRECTORSHIPS:
None
None
No interlocking public company
directorships(3)
BOARD AND COMMITTEE MEMBERSHIPS AND ATTENDANCE:
Board of Directors
100%
SECURITIES HELD(1):
Canada Bread Company, Limited Common Shares
Maple Leaf Foods Inc. Common Shares
4
2009 CANADA BREAD COMPANY, LIMITED MANAGEMENT INFORMATION CIRCULAR
2,500
87,500(2)
G. Wallace F. McCain, C.C.
Age: 78
Residence: Toronto,
Ontario, Canada
Director Since 1995
Not Independent
OCCUPATION: Chairman, Maple Leaf Foods Inc.
BIOGRAPHY: Mr. McCain co-founded McCain Foods Limited in 1956 which has grown to
become one of the largest frozen food companies in the world. Mr. McCain was President and
Co-Chief Executive Officer of McCain Foods Limited until 1995 and is currently its ViceChairman and a director and is a director of other associated companies within the McCain
Foods Group. Mr. McCain is also a director of St. Michael’s Hospital Board, Brookfield Asset
Management Inc. and Canada Bread Company, Limited. He is Co-Chair of the National Ballet
School Financial Campaign. Mr. McCain is a Companion of the Order of Canada.
CURRENT DIRECTORSHIPS:
DIRECTORSHIPS WITHIN THE PAST 5 YEARS:
Brookfield Asset Management Inc.
None
Maple Leaf Foods Inc.
(Interlocking directorship with M.H. McCain
and J.S. McCain)(3)
BOARD AND COMMITTEE MEMBERSHIPS AND ATTENDANCE:
Board of Directors
100%
SECURITIES HELD(1):
Canada Bread Company, Limited Common Shares
Maple Leaf Foods Inc. Common Shares
J. Scott McCain
Age: 52
Residence: Toronto,
Ontario, Canada
Director Since 1995
Not Independent
0
356,781(2)
OCCUPATION: President and Chief Operating Officer, Agribusiness Group, Maple Leaf
Foods Inc.
BIOGRAPHY: Prior to joining Maple Leaf Foods in 1995, Mr. McCain was Vice-President for
Production, McCain Foods Limited in Canada. Mr. McCain joined McCain Foods Limited in
1978 where he held progressively senior positions in manufacturing and operations. He is a
director of Canada Bread Company, Limited, as well as a director of McCain Foods Group Inc.
He is a member of the Board of Regents at Mount Allison University and a board member of
Food Processors of Canada.
CURRENT DIRECTORSHIPS:
DIRECTORSHIPS WITHIN THE PAST 5 YEARS:
Maple Leaf Foods Inc.
None
(Interlocking directorship with
G.W.F. McCain and M.H. McCain)(3)
BOARD AND COMMITTEE MEMBERSHIPS AND ATTENDANCE:
Board of Directors
100%
SECURITIES HELD(1):
Canada Bread Company, Limited Common Shares
Maple Leaf Foods Inc. Common Shares
0
206,339(2)
2009 CANADA BREAD COMPANY, LIMITED MANAGEMENT INFORMATION CIRCULAR
5
Michael H. McCain
Age: 50
Residence: Toronto,
Ontario, Canada
Director Since 1995
Not Independent
OCCUPATION: President and Chief Executive Officer, Maple Leaf Foods Inc.
BIOGRAPHY: Mr. McCain joined Maple Leaf Foods in April 1995 as President and Chief
Operating Officer. Prior to joining Maple Leaf Foods, Mr. McCain spent 16 years with McCain
Foods Limited in Canada and the United States and was, at the time of leaving in March 1995,
President and Chief Executive Officer of McCain Foods USA Inc. In January 1999, Mr. McCain
was appointed Chief Executive Officer of Maple Leaf Foods. He is the Chairman and a director
of Canada Bread Company, Limited, a director of McCain Foods Group Inc., the American
Meat Institute, the CAMH (Centre for Addiction and Mental Health) Foundation, and Royal
Bank of Canada. Mr. McCain is a past director of the American Frozen Food Institute and
Bombardier Inc.
CURRENT DIRECTORSHIPS:
DIRECTORSHIPS WITHIN THE PAST 5 YEARS:
Royal Bank of Canada
Bombardier Inc.
Maple Leaf Foods Inc.
(Interlocking directorship with
G.W.F. McCain and J.S. McCain)(3)
BOARD AND COMMITTEE MEMBERSHIPS AND ATTENDANCE:
Board of Directors
100%
SECURITIES HELD(1):
Canada Bread Company, Limited Common Shares
Maple Leaf Foods Inc. Common Shares
John F. Petch, Q.C., B.A.,
J.D., LL.M.
Age: 70
Residence: Toronto,
Ontario, Canada
Director Since 1995
Independent
0
369,273(2)
OCCUPATION: Consulting Counsel, Osler Hoskin & Harcourt LLP (law firm)
BIOGRAPHY: Mr. Petch is consulting counsel to Osler, Hoskin & Harcourt LLP, a leading
Canadian law firm. He is currently a director of ShawCor Ltd. and director and Vice-Chair of
Andrew Peller Limited, both of which are publicly traded companies listed on the Toronto Stock
Exchange. Mr. Petch holds B.A., J.D. and LL.M. degrees and has practiced extensively in
business law including mergers and acquisitions. He is Chair of the Board of Governors of the
University of Toronto and past Vice-Chair of its Business Board. He is also past Chair of
St. Michael’s Hospital, an affiliated hospital of the University of Toronto, and past Chair of its
Business Affairs Committee.
DIRECTORSHIPS WITHIN THE PAST 5 YEARS:
CURRENT DIRECTORSHIPS:
ShawCor Ltd.
None
Andrew Peller Limited
No interlocking public company
directorships(3)
BOARD AND COMMITTEE MEMBERSHIPS AND ATTENDANCE:
Board of Directors
Chairman, Governance Committee
100%
100%
SECURITIES HELD(1):
Canada Bread Company, Limited Common Shares
Maple Leaf Foods Inc. Common Shares
6
2009 CANADA BREAD COMPANY, LIMITED MANAGEMENT INFORMATION CIRCULAR
1,000
0
Michael H. Vels
Age: 47
Residence: Toronto,
Ontario, Canada
Director Since 2007
Not Independent
OCCUPATION: Executive Vice-President and Chief Financial Officer, Maple Leaf Foods Inc.
BIOGRAPHY: Mr. Vels joined Maple Leaf Foods Inc. in 1991 during which time, he has held
senior finance positions of increasing responsibility and was appointed to his current
responsibilities as Executive Vice-President and Chief Financial Officer of Maple Leaf Foods
Inc. in 2004. Mr. Vels was appointed Chief Financial Officer of the Corporation in 1999. He
received his Chartered Accountant designation in South Africa in 1985 and worked for several
years in the United Kingdom, specializing in mergers and acquisitions.
DIRECTORSHIPS WITHIN THE PAST 5 YEARS:
CURRENT DIRECTORSHIPS:
None
None
No interlocking public company
directorships(3)
BOARD AND COMMITTEE MEMBERSHIPS AND ATTENDANCE:
Board of Directors
88%
SECURITIES HELD(1):
Canada Bread Company, Limited Common Shares
Maple Leaf Foods Inc. Common Shares
0
107,797
Notes:
(1) As of March 7, 2009, the nominees for directors listed above beneficially owned, directly or indirectly, or exercised control or direction
over the number of common shares of the Corporation and Maple Leaf indicated in the table above. The information as to shares beneficially
owned, not being within the knowledge of the Corporation, has been furnished by the respective directors individually.
(2) Maple Leaf Foods holds approximately 89.8% of the shares of Canada Bread. McCain Capital Corporation is the owner of 41,518,153
voting common shares of Maple Leaf Foods representing approximately 32.0% of all issued and outstanding shares (38.7% of voting shares)
of Maple Leaf Foods. The majority of the shares of McCain Capital Corporation are owned by members of the G. Wallace F. McCain
family including G.W.F. McCain, M.H. McCain and J.S. McCain. Mr. R.A. Lan is also a shareholder of McCain Capital Corporation.
(Reference is made to the heading “Voting Securities and Principal Holders Thereof”.)
(3) Directors who served together on the board of directors of other publicly traded companies as at March 7, 2009.
INFORMATION REGARDING CERTAIN DIRECTORS
Within ten years preceding the date of this circular:
Mr. Aziz was an officer of Omega Digital Inc., a private company which consented to the appointment of a receiver by its
bank creditor (1998). Mr. Aziz was an officer of White Rose Crafts and Nursery Sales Limited, a public company which
operated under protection of the Companies Creditors’ Arrangement Act (Canada) (“CCAA”) and filed a sanctioned plan
of compromise and arrangement (1999). Mr. Aziz was a director of Doman Industries Limited (2003 and 2004) during
the period while the company was operating under CCAA protection (granted in 2002) and filed a sanctioned plan of
compromise and arrangement (2004). Mr. Aziz was appointed an officer of Atlas Cold Storage Income Trust (2003) when
certain officers and directors (not including Mr. Aziz) were the subject of a cease trade order. Mr. Aziz was appointed the
Chief Financial Officer of Hollinger Inc. and its subsidiaries from March, 2007 to May 2008 and Chief Restructuring
Officer of Hollinger Inc. and certain of its subsidiaries since May 2008 which corporation and certain subsidiaries were
granted an initial order under the CCAA on August 1, 2007.
When Mr. Aziz was appointed the CFO of Hollinger Inc. on March 8, 2007, he became subject to a management cease
trade order (“MCTO”) in respect of Hollinger Inc. which was originally issued on June 1, 2004 by the Ontario Securities
Commission and which order remained in place until April 10, 2007, when the MCTO was revoked by the Ontario
Securities Commission as a result of the updating of all filings that Hollinger Inc. was required to make pursuant to Ontario
securities laws. Mr. Aziz was subsequently appointed Chief Restructuring Officer of Hollinger Inc. in 2008 and since that
time the Ontario and Alberta Securities Commissions have issued Permanent Cease Trade Orders against Hollinger Inc.,
with the consent of the company and approved by the Ontario Superior Court of Justice.
Ms. Everett was Chairman and a director of Tereve Holdings Ltd., a private company which was subject to proceedings
under the CCAA in 2005 and subsequently to bankruptcy proceedings under the Bankruptcy and Insolvency Act (Canada)
in 2006.
2009 CANADA BREAD COMPANY, LIMITED MANAGEMENT INFORMATION CIRCULAR
7
APPOINTMENT OF AUDITORS
The Board of Directors of the Corporation proposes that KPMG LLP be appointed as auditors of the Corporation and that
the shareholders authorize the directors to fix their remuneration. The persons named in the enclosed form of proxy
(unless otherwise instructed) intend to vote to appoint KPMG LLP, Chartered Accountants, Toronto, as auditors
of the Corporation to hold office until the next Annual Meeting of the Shareholders of the Corporation and to
authorize the directors to fix their remuneration. KPMG LLP was first appointed auditor of Canada Bread in 1995 and
has served continuously since then.
For the years ended December 31, 2008 and 2007, the fees paid by the Corporation for the services performed by
KPMG LLP are set out in the table below. Annually, the Audit Committee reviews a summary of all services provided by
the auditors to the Corporation and its subsidiaries. The Audit Committee has established a policy requiring prior approval
by the Committee or the Chairman of the Committee of all non-audit services to be rendered by KPMG LLP.
In the last two years, KPMG LLP has not provided any of following services to the Corporation: (i) bookkeeping services
and other services related to accounting records or financial statements; (ii) financial information systems design and
implementation; (iii) appraisal or valuation services, fairness opinions or contribution-in-kind reports; (iv) actuarial
services; (v) internal audit outsourcing services; (vi) management functions; (vii) human resources; (viii) broker-dealer,
investment advisor or investment banking services; (ix) legal services and expert services unrelated to the audit.
Description
Audit fees (1)
Audit-related fees (2)
Tax fees (3)
All other fees (4)
Total fees
2008
($)
974,759
251,214
466,759
1,692,732
2007
($)
860,946
764,156
204,367
—
1,829,469
Notes:
(1) For the audit of the Canada Bread annual financial statements (including the audits of subsidiaries).
(2) Audit-related services consisting primarily of audit procedures related to business acquisition transactions, audits of financial statements
of employee benefit plans that are not reported in (1), accounting consultations, comfort letters and various agreed upon procedures.
(3) For tax compliance, advice, planning and return preparation services.
(4) For products and services other than the fees reported in (1) to (3).
8
2009 CANADA BREAD COMPANY, LIMITED MANAGEMENT INFORMATION CIRCULAR
DIRECTORS’ AND EXECUTIVE COMPENSATION
COMPENSATION OF DIRECTORS
Directors of the Corporation received remuneration for their services during the 2008 financial year in an aggregate amount
of $352,300. Retainers for Board and committee service are paid annually in advance. These retainers were paid following
election of the directors at an annual meeting and are in respect of service on the Board for the period commencing then
and ending on the date of the next annual meeting. The 2008 compensation schedule is as follows:
Director’s Retainer
Committee Retainer
Chairman, Governance Committee Retainer
Chairman, Audit Committee Retainer
$70,000
$ 1,500
$ 3,000
$ 8,000
Fee for attendance in person at Board meeting
Fee for attendance by teleconference at Board meeting
Fee for attendance at committee meeting on same day as a Board meeting
Fee for attendance at committee meeting by teleconference
Fee for attendance at committee meeting otherwise
$ 1,500
$ 800
$ 800
$ 800
$ 1,000
The Governance Committee has recommended that a portion of the annual retainer be used to purchase Common Shares
of the Corporation. Directors who are officers of the Corporation or any subsidiary company or of Maple Leaf Foods do
not receive fees. Directors are also reimbursed for travel and other out-of-pocket expenses incurred in attending Board or
committee meetings.
Name
William E. Aziz
John L. Bragg
Sarah Everett
John F. Petch
Total
Fees
Earned
($)
92,100
84,000
90,100
86,100
352,300
ShareBased
Awards
($)
–
Option
Board
Awards
($)
Non-Equity
Incentive Plan
Compensation
($)
–
–
Pension
Value
($)
–
All Other
Compensation
($)
Total
($)
–
92,100
84,000
90,100
86,100
352,300
COMPOSITION OF THE COMPENSATION COMMITTEE
The Governance Committee serves as the Corporation’s compensation committee. The Governance Committee is
composed of three directors, all of whom are independent within the meaning of applicable securities laws. The Committee
consists of John F. Petch (Chairman), William E. Aziz and Sarah A. Everett. The composition of the Committee was
changed on December 16, 2008 when Mr. John L. Bragg resigned from the Board and Mr. Aziz was appointed to the
Governance Committee.
No member is currently the Chief Executive Officer of any publicly listed entity. Each Committee member has experience
with executive compensation matters. The Committee supports its independence by meeting in camera at the request of
any member but at least once per year.
The Committee meets at least twice a year as required at the call of the Chairman of the Committee. In 2008, the Committee
met four (4) times.
2009 CANADA BREAD COMPANY, LIMITED MANAGEMENT INFORMATION CIRCULAR
9
EXECUTIVE COMPENSATION
COMPENSATION DISCUSSION AND ANALYSIS
Compensation Philosophy
In 2006, the Chief Executive Officer (“CEO”) assumed the additional role as Chief Operating Officer, Food Group, Maple
Leaf Foods Inc. and the Chief Financial Officer (“CFO”) is also CFO of Maple Leaf Foods Inc. Compensation decisions
regarding the CEO and CFO are made by the Board and the Human Resources and Compensation Committee of Maple
Leaf Foods Inc. and then reviewed with the Governance Committee of Canada Bread Company, Limited. The CEO and
CFO’s compensation is borne partially by Canada Bread Company, Limited and partially by Maple Leaf Foods Inc. through
a shared services agreement. In all cases, the compensation systems and philosophy for the two companies are coordinated
and allow for the free movement of executives and staff between them.
The Corporation has four main components to its compensation for senior executives: base salary, annual bonus,
participation in equity-based plans, and benefits in kind. The first three of these components have as their objectives to
attract, motivate and retain the Named Executive Officers (“NEOs”).
The Corporation’s philosophy is to provide median fixed compensation (base salary), and above median (up to the 75th
percentile) salaries for sustained excellent performance. Similarly, the Corporation offers median variable or at-risk
compensation linked to performance (bonuses). Superior performance will lead to above-market bonuses. A similar
philosophy applies to long-term incentives. Regarding benefits and perquisites, the Corporation’s philosophy is to reward
employees with competitive base pay plus a significant amount of variable compensation, based on performance. As such,
other incentives that cannot be converted to variable compensation are minimized. For example, while the Corporation
provides the option of a company car or a car allowance, the value of the car is relatively low, but the Corporation’s
compensation packages in total, including this benefit, are designed to be competitive and attract executives who support
the philosophy of performance-driven compensation.
The Corporation has adopted a comprehensive and rigorous performance evaluation methodology for all salaried
employees, upon which all compensation matters are based. The Corporation’s compensation philosophy is to provide
competitive compensation which targets the competitive median and above for base salary and incentive levels for its
senior executives while recognizing and rewarding top performers above the competitive median through variable or atrisk compensation which reflects the performance / sustained contribution of each executive.
Compensation Elements
The Corporation’s executive compensation program is comprised of fixed and variable components. The variable
components include equity and non-equity incentive plans. Each compensation component has a different function, but
all elements work in concert to maximize company and individual performance by establishing specific, competitive
operational and financial goals and providing financial incentives to employees based on their level of achievement of
these goals.
The compensation program consists of the following components:
Base Salary – Base salary and annual adjustments are based on an assessment of the individual executive’s responsibility,
experience, contribution and assessed performance and the financial performance of the Corporation as well as salary
levels for other companies in a benchmark. The annual adjustment date is the start of the pay period in which July 1 occurs.
For the CEO, base salary is set by taking into account salary levels of US companies in the consumer packaged goods
industry. With respect to the CFO, base salary is set by taking into account salary levels of Canadian companies of a similar
size (75% weighting) and several US companies in the consumer packaged goods industry (25% weighting).
10 2009 CANADA BREAD COMPANY, LIMITED MANAGEMENT INFORMATION CIRCULAR
For 2008, the benchmark Canadian companies included:
Alimentation Couche-Tard
ACE Aviation Holdings
METRO Inc.
Brookfield Asset Mgmt
Canadian Tire Corp.
Shoppers Drug Mart
Celestica
Fairfax Financial Hldg
Thomson Corp.
CFO
ING Canada Inc.
Saputo Inc.
Sears Canada Inc.
Finning International
Agrium Inc.
Industrial-Alliance Life Ins.
RONA Inc.
Canadian Pacific Railway
Cascades Inc.
Transat AT Inc.
Atco Ltd.
Shaw Communications
CanWest Global Com
TransAlta Corp.
Tembec Inc.
Tim Hortons Inc.
Note:
(1) Includes companies in the benchmark database with revenue between $3.5 billion and $14 billion that have a position similar to the NEOs
The benchmark US companies included:
Tyson Foods Inc.
General Mills Inc.
Sara Lee Corp,
Conagra Foods Inc.
Dean Foods Co.
Kellogg
Heinz (H J) Co.
CEO and CFO
Campbell Soup Co.
Pilgrims Pride Corp.
Hormel Foods Corp.
Wrigley (WM) Jr Co.
Hershey Foods Corp.
Chiquita Brands Intl Inc.
Del Monte Foods
Seaboard Corp.
McCormick & Co.
Ralcorp Holdings Inc.
Smucker (JM)
Flowers Foods In.
For other Canadian NEOs, base salary is set by taking into account salary levels reported for companies in the 2007
Canadian Mercer Benchmark Data Base with revenue between $3.5 billion and $14 billion that have a position similar to
the NEOs (75% weighting) and salary levels reported for companies in the 2007 US Mercer Benchmark Data Base with
revenue between $3.5 billion and $14 billion that have a position similar to the NEOs (25% weighting).
For the UK based NEO, the benchmark used was the Monks (a division of PricewaterhouseCoopers) UK salary database
for managing directors of consumer manufacturing and service operating divisions with revenue of £50 million, £100
million and £150 million.
Annual Incentive Plan – The Corporation’s annual incentive plan is known as Rewards for Excellence (“RFE”). RFE
aims to enhance the link between pay and performance by:
• Aligning the financial and operational interests and motivations of the Corporation’s management team and
employees with the annual financial returns of the Corporation;
• Motivating management to work towards common annual performance objectives while acknowledging and
rewarding individual goal achievement;
• Providing total cash compensation that is greater than the median of the Market Peer Group in cases where
superior financial performance in excess of target objectives is attained; and
• Providing total cash compensation that is at or below the market median in cases where performance objectives
are not attained.
Under the plan, one portion of an executive’s bonus is determined by team performance against earnings before tax (“EBT”)
targets and another portion by the achievement of personal objectives. Participation levels for the bonus program are
determined by market competitiveness. The table below outlines the components of the plan for the NEOs.
Prior to 2008, the weight assigned to personal objectives for the CEO and the CFO was 10%. In the case of the CEO,
the personal objectives included earnings performance for the Foods Group, Maple Leaf Foods of which he was the COO.
In 2008, the weight assigned to personal objectives was increased to 20% to align with peer group companies. Furthermore,
earnings performance for the Foods Group was excluded from his personal objectives. The revision was made effective
January 1, 2008.
2009 CANADA BREAD COMPANY, LIMITED MANAGEMENT INFORMATION CIRCULAR 11
Executive
Payout as % of Salary
_______________________________
Target
Minimum(1) Maximum
CEO & CFO
Other NEOs
80%
60%
35%
20%
Team Performance
_______________________________
Measure(3)
%
125%
95%
EBT for MLF as a whole
EBT for Business Unit
80%
75%
Personal Objectives
_______________________
Measure
%
(2)
(2)
20%
25%
Notes:
(1) Below the minimum performance level, no bonus is payable. At the minimum level, the amount shown is payable.
(2) Personal objectives are set based on the executive’s area of responsibility such as a goal to launch new products, or open a new plant or a
new line. The objectives are established at the start of the year and are approved by the Board.
(3) Earnings before tax excluding unusual items. Mr. Lan is CEO of the Corporation as well as Chief Operating Officer, Food Group, Maple
Leaf Foods Inc. Mr. Vels, the CFO of the Corporation, is also CFO of Maple Leaf Foods Inc. Their compensation is paid by Maple Leaf
Foods with a portion borne by the Corporation through a shared services agreement. For both executives, the team portion of the RFE bonus
is calculated on the earnings for Maple Leaf Foods as a whole, including Canada Bread.
The following table illustrates the bonus payout as a percentage of base salary at the minimum, target and maximum
performance levels.
Annual Incentive Range and Components
Target
Bonus
Performance Level
CEO & CFO
All Other NEOs
80%
60%
Team Performance Component(1)
Personal Performance Component(1)
Minimum
Target
Maximum
Minimum
Target
Maximum
Performance Performance Performance Performance Performance Performance
85%/75%(2)
100%
115%/125%(2)
75%
100%
125%
28%
18.75%
64%
45%
100%
71.25%
7%
6.25%
16%
15%
25%
23.75%
Notes:
(1) For team performance below the minimum, no bonus is payable and at performance above the maximum, the maximum is payable.
(2) For the CEO and CFO the minimum for team performance is 85% of the target and the maximum is 115% of the target. For other business
unit presidents, minimum team performance of 75% is required for a bonus payment and 125% for a maximum payment.
Annual Incentive for 2008
Team Performance
Score as
Compared
RFE
to Target
Payout
%
$
Lan, R.A.
Vels, M.H.
McLean, C.B.
Ménard, R.R.
Maycock, P.G.
Below 85(1)
Below 85(1)
89.9(2)
104.6(2)
83.0(2)(3)
0
0
177,134
182,378
97,466
Number of
Objectives
39
22
5
5
8
Personal Objectives
Score as
Compared
RFE
to Target
Payout
%
$
94.8
101.5
96.3
119.3
100.0(3)
116,408
105,856
70,581
79,623
53,848
Total
RFE
Payout
$
116,408
105,856
247,715
262,001
151,313
Notes:
(1) For both Mr. Lan and Mr. Vels, the team portion of the RFE bonus is calculated on the earnings for Maple Leaf Foods as a whole including
the results of Canada Bread.
(2) The targets are calibrated so that they can be achieved with strong effort by the unit and no unusual circumstances. A maximum payout,
while possible, is not likely to occur frequently. Over time, the average score is expected to be 100%.
(3) The UK operations suffered an oven fire at the start of the year that had a large impact on earnings. Earning include receipts under the
Company’s business interruption insurance. A personal objective regarding sales on products baked in the affected oven was scored at the
target of 100% as the inability to achieve the target was due to the oven fire and was beyond the executive’s control.
Equity Incentive Compensation – Senior employees of the Corporation are eligible to participate in the Maple Leaf
Foods share compensation arrangements and awards have been granted to executives from time to time, based on
recommendations by senior management. Participation in the executive equity incentive program is designed to:
•
•
•
•
•
Recognize and reward the impact of longer-term strategic actions undertaken by management;
Align the interests of the Corporation’s key employees and its shareholders;
Focus management on developing and successfully implementing the continuing growth strategy of the Corporation;
Foster the retention of key management personnel; and,
Attract talented individuals to the Corporation.
12 2009 CANADA BREAD COMPANY, LIMITED MANAGEMENT INFORMATION CIRCULAR
In 2006, the Maple Leaf Foods restricted share unit (“RSU”) plan was revised. Under the revised plan, on maturity vested
RSUs are distributed in the form of shares purchased by a trust on the Toronto Stock Exchange (“TSX”). The maturity
period under the new structure is limited to three years. The performance vesting formula (based on the Maple Leaf Foods’
total shareholder return versus the S&P Food Index) has remained in place with some modifications. For each RSU granted,
one share is awarded on maturity if Maple Leaf Foods’ performance equals the S&P Food Index. (The S&P Food Index,
while not a published index, is maintained by Standard & Poor’s and consists of the food company stocks, approximately
30,
that
are
in
the
S&P 500 Index, the S&P Midcap 400, and the S&P Smallcap 600). At 75% performance or less, one-half share vests and
is awarded for each RSU held. At 125% performance, the maximum, one and a half shares, vest and are awarded for each
RSU held.
PERFORMANCE (1)
75% or below
100%
125% or above
PERCENT VESTING
50%
100% (2)
150% (2)
Notes:
(1) Performance means Maple Leaf Foods’ total shareholder return expressed as a percentage of the S&P Food Index total shareholder return for the
same period.
(2) Vesting is prorated if performance is between 75% and 100%, or 100% and 125%.
Of the minimum 50% number of RSUs that will ultimately vest, one half of this amount is distributed as shares to holders
18 months after grant and the remainder three years after grant. Three years following the date of grant all RSUs that have
vested in accordance with the table, less any RSUs that were distributed earlier, will vest and be distributed as shares.
The number of share options and RSUs granted to each executive and to all senior managers is based on individual
performance assessments.
The number of RSUs granted is based on the expected value of the RSUs. For each executive, the award is based on the
median of similar awards in a benchmark group and the executive’s individual performance.
Benefits and Perquisites –
Group Benefits – Executives enjoy the same group benefits (Life, Health, Dental, Disability, Optional Life) as other
salaried employees of the Corporation. Benefits and perquisites for the NEOs are below the lesser of $50,000 or 10% of
their base salary. Perquisites consist of a car benefit, club membership, annual medical examination, financial counselling
and business class air travel. The Corporation does not believe that these compensation features help it to attract, retain
and/or motivate executives to any material extent.
Pension Benefits – Pension benefits provided to executives are non-discriminatory. Executives participate in the pension
arrangements available to substantially all of the Corporation’s salaried employees. In the case of senior executives
participating in the Canadian defined benefit pension plans, all required contributions are made by the Corporation while
non-executive salaried employees are required to make contributions to the plan.
2009 CANADA BREAD COMPANY, LIMITED MANAGEMENT INFORMATION CIRCULAR 13
STOCK PERFORMANCE TABLE
The following chart compares the total cumulative shareholder return of $100 invested in Canada Bread Common Shares
for the period December 31, 2003 to December 31, 2008 with the cumulative total return of the S&P/TSX Composite Total
Return Index for the same period. The Corporation’s Common Shares closed at $47.25 on the TSX on December 31, 2008,
the last trading day prior to the end of the fiscal year.
300
250
200
150
100
50
0
2003
2004
2005
2006
2007
2008
S&P/TSX Composite Total Return Index
CBY
S&P/TSX Composite Total Return Index
Canada Bread Shares
Dec. 31,
2003
100.0
100.0
Dec. 31,
2004
114.5
184.2
Dec. 31,
2005
142.1
232.3
Dec. 31,
2006
161.1
213.8
Dec. 31,
2007
183.0
273.9
Dec. 31,
2008
122.6
188.2
Comparison of Executive Compensation and Shareholder Returns
For the three years of compensation in the measurement period, compensation of the NEOs increased by 18% while the
total shareholder return on the Corporation’s shares was a decline of 14%. The following table shows the shareholder
return and total compensation for that period.
It is important to note that the total compensation included the full earnings for both the CEO and the CFO who are paid
by the Corporation’s 89.8% parent company, Maple Leaf Foods Inc. Compensation decisions regarding the CEO and CFO
are made by the Board and the Human Resources and Compensation Committee of Maple Leaf Foods Inc. and then reviewed
with the Governance Committee of Canada Bread Company, Limited. The CEO’s and CFO’s compensation is borne partially
by Canada Bread Company, Limited and partially by Maple Leaf Foods Inc. through a shared services agreement.
Total
2006–08
2008
2007
2006
Total Shareholder Return:
CBY (% change – $CAD per share)(1)
S&P/TSX Composite Total Return Index
–14%
–19%
–31%
–33%
28%
14%
–8%
13%
Total Compensation for All NEOs(2)
$26.3
$8.7
$10.5
$7.2
Notes:
(1) Total shareholder return is calculated on the basis of the year-end share value with dividends reinvested. The amount in the “Total 2006 to
2008” column is the aggregate compound return over the three-year period.
(2) The total compensation shown for all NEOs is the total compensation as that term is defined for purposes of the summary compensation
table for the NEOs.
14 2009 CANADA BREAD COMPANY, LIMITED MANAGEMENT INFORMATION CIRCULAR
SUMMARY COMPENSATION TABLE
The following table provides a summary of compensation earned during each of the last three fiscal years by the CEO,
the CFO (including any individual who held the position during the year), and the three most highly compensated executive
officers other than the CEO and CFO. The CEO, CFO and other executive officers are referred to collectively as the
“NEOs”. This information is given as of December 31, 2008, the end of the most recently completed financial year of the
Corporation.
Name and
Principal Position
Year
Salary
($)
ShareBased
Awards(2)
($)
OptionBased
Awards
($)
Annual Long-Term
Incentive Incentive
Plans
Plans
($)
($)
Pension
Value(3)
($)
All Other
Compensation
($)
Total
Compensation
($)
R.A. LAN (1)
President, Chief
Executive Officer
2008
2007
2006
866,137
832,955
722,985
2,303,381
2,253,504
1,899,008
124,093
971,435
162,842
9,807
9,673
13,609
3,303,418
4,067,567
2,798,444
M.H. VELS
Chief Financial
Officer
2008
2007
2006
630,000
603,846
575,000
1,151,259
1,201,869
899,530
105,856
808,152
55,802
103,642
135,684
123,930
1,990,757
2,749,551
1,654,262
C.B. McLEAN
President,
Fresh Bakery
2008
2007
2006
507,500
484,987
457,475
623,563
615,958
534,322
247,715
367,778
322,779
85,120
103,128
87,976
1,463,898
1,571,851
1,402,552
R.R. MÉNARD
President, Frozen
Frozen Bakery
2008
2007
2006
360,500
343,000
301,000
335,964
480,747
200,371
262,001
337,250
128,848
72,237
83,162
57,081
1,030,702
1,244,159
687,300
P.G. MAYCOCK (4)
President, Maple
Leaf Bakery UK
2008
2007
2006
335,445
330,356
295,013
335,964
375,584
160,297
151,313
248,627
200,034
17,949
16,519
14,752
840,672
971,086
670,096
Notes:
(1) All compensation shown for Mr. Lan other than equity based and long term compensation amounts is paid in US dollars. The amounts in
the table above were converted using the average exchange rate for the year: 1.0660 in 2008, 1.0748 in 2007, and 1.1341 in 2006. In the
table below under the heading “Summary Compensation Table – Supplemental Information”, Mr. Lan’s compensation is shown in US dollars.
(2) The share-based awards represent restricted share units (“RSUs”) granted under the 2006 Share Incentive Plan, details of which are found
on page 16 under the heading entitled “Share-Based Incentive Plans”. The RSUs have been valued using assumptions and methodology
consistent with those for valuing the expense in the financial statements, except that no discount for potential forfeiture of RSUs due to
termination of employment was factored into the valuation. The number of shares expected to vest under the plan was estimated based on
the historic volatility of the Corporation’s share price in comparison to the volatility of the S&P Food Index. The assumptions used for
accounting purposes are found in Note 17 of the financial statements of the Corporation for the years ended December 31, 2008 and 2007.
The financial statements may be found on the Corporation’s website at www.mapleleaf.ca and on SEDAR at www.sedar.com.
(3) Messrs. Lan and Maycock participate in defined contribution plans of the Corporation. Mr. McLean and Mr. Ménard are members of the
Canada Bread defined benefit pension plans, while Mr. Vels belongs to the Maple Leaf Foods defined benefit pension plans. The amount
in the table above represents the pension expense related to the service for each of the NEOs, including the impact of differences between
actual compensation paid in 2008 and the actuarial assumptions used for the year. The amount shown for Mr. Lan is the Corporation’s
contribution to a defined contribution 401(k) plan in the United States and for Mr. Maycock to the Corporation’s Group Personal Pension
Plan in the UK.
(4) All compensation shown for Mr. Maycock other than equity-based and long-term compensation amounts is paid in U.K. pounds sterling
(GBP£). The amounts in the table above were converted to GBP£ using the average exchange rate for the year: 1.9617 in 2008, 2.1487
in 2007, and 2.0886 in 2006. In the table below under the the heading “Summary Compensation Table – Supplemental Information”,
Mr. Maycock’s compensation is shown in GBP£.
2009 CANADA BREAD COMPANY, LIMITED MANAGEMENT INFORMATION CIRCULAR 15
Summary Compensation Table – Supplemental Information
Name and
Principal Position
USD $
R.A. LAN(6)
President, Chief
Operating Officer,
Foods Group
GBP £
P.G. MAYCOCK
President, Maple
Leaf Bakery UK
Year
Salary
ShareBased
Awards
2008
2007
2006
812,500
777,500
637,500
2,160,741
2,096,709
1,674,472
2008
2007
2006
171,000
153,750
141,250
171,264
174,800
76,749
LongTerm
Incentive
Plans
OptionBased
Awards
Annual
Incentive
Plans
–
–
–
116,408
903,844
143,588
9,200
9,000
12,000
3,098,849
3,787,053
2,467,560
77,135
115,713
95,775
9,150
7,688
7,063
428,549
451,951
320,837
Pension
Value
All Other
Compensation
Total
Compensation
Share-Based Incentive Plans
In 2006, Maple Leaf Foods adopted a new share-based incentive compensation plan (the “2006 Plan” or the “RSU Plan”)
for its employees and executive officers and employees and executive officers of its subsidiaries (including Canada Bread).
The 2006 Plan provides for the grant of restricted share units (“RSUs”). On maturity, assuming the performance criteria
are achieved, participants receive one fully paid share of Maple Leaf Foods for each vested RSU held. The following table
sets out the RSUs awarded to the named executive officers in 2008 under the 2006 Plan. Executives of Canada Bread
have participated in Maple Leaf Foods’ three equity incentive plans: the 1982 Option Plan, the 2004 Share Incentive Plan
and the 2006 Plan. The 2004 Share Incentive Plan provides for the grant of options and restricted share units (“RSUs”)
that are satisfied by the issuance of shares by Maple Leaf Foods from treasury. The 2006 Plan provides for the grant of
RSUs that are satisfied through the acquisition of Maple Leaf Foods shares in the market by a trust established for that
purpose. Share options were issued under the 1982 Option Plan and the 2004 Share Incentive Plan.
Generally, all share options and RSUs have a performance condition whereby vesting is based on the total return of the
Maple Leaf Foods’ shares for the period compared with the total return of the S&P Food Index, a group of approximately
30 North American food stocks.
16 2009 CANADA BREAD COMPANY, LIMITED MANAGEMENT INFORMATION CIRCULAR
Outstanding RSUs and Share Options
Number of
Securities
Underlying
Unexercised
Options
#
Option
Exercise
Price
$
Value of
Unexercised
In-the-Money
Option Expiration Date(1) Options(2) Date of Grant
$
Lan, R.A.
53,300
110,000
55,000
70,000
$14.74
$10.30
$13.21
$16.37
June 26, 2009
August 27, 2010
September 16, 2011
September 7, 2012
–
84,700
–
–
Vels, M.H.
46,700
90,000
55,000
70,000
$14.74
$10.30
$13.21
$16.37
June 26, 2009
August 27, 2010
September 16, 2011
September 7, 2012
–
69,300
–
–
McLean, C.B.
66,700
70,000
35,000
35,000
$14.74
$10.30
$13.21
$16.37
June 26, 2009
August 27, 2010
September 16, 2011
September 7, 2012
–
53,900
–
–
Ménard, R.R.
10,000
6,700
22,500
18,750
$14.74
$10.30
$13.21
$16.37
June 26, 2009
August 27, 2010
September 16, 2011
September 7, 2012
–
5,159
–
–
Maycock, P.G.(6) 16,700
25,000
12,500
8,000
$14.74
$10.30
$13.21
$16.37
June 26, 2009
August 27, 2010
September 16, 2011
September 7, 2012
–
19,250
–
–
Name
September 16, 2004
September 7, 2005
November 1, 2006
October 1, 2007
October 1, 2008
September 16, 2004
September 7, 2005
November 1, 2006
October 1, 2007
October 1, 2008
September 16, 2004
September 7, 2005
November 1, 2006
October 1, 2007
October 1, 2008
September 16, 2004
September 7, 2005
November 1, 2006
October 1, 2007
October 1, 2008
September 16, 2004
September 7, 2005
November 1, 2006
October 1, 2007
October 1, 2008
Number of
Market of
Shares or Payout Value of
Units of
Share-Based
Shares That Awards That
Have Not
Have Not
Vested(3)(4)
Vested(5)
#
$
9,200
23,300
213,750
225,000
400,050
9,200
23,300
101,250
120,000
199,950
5,800
11,700
56,250
61,500
108,300
3,750
6,275
21,093
48,000
58,350
2,050
2,700
16,875
37,500
58,350
–
–
473,243
830,250
1,476,185
–
–
224,168
442,800
737,816
–
–
124,538
226,935
399,627
–
–
46,702
177,120
215,312
–
–
37,361
138,375
215,312
Notes:
(1) All share options listed in the table above vest over a minimum of three years and maximum of five years based on the return of the Maple
Leaf Foods shares for the period compared with the return of the S&P Food Index. If the total return of the Maple Leaf Foods shares is
below 75% of the total return of the comparative index for the relevant measurement period, none of the options vest. At 75%, one-half vest.
If performance falls between 75% and 100% a proportionate number will vest. The options have a term of seven years but expire earlier if
the executive ceases to be an employee.
(2) The in-the-money value was calculated using the closing share price of Maple Leaf Foods on the TSX of $11.07 per share on December 31, 2008.
(3) RSUs granted before 2006 were granted under the 2004 Share Incentive Plan. Under the plan, for each RSU awarded, if the performance
vesting conditions are met, one share of Maple Leaf Foods will be distributed to the participant. The RSUs vest over three to five years based
on the total return of Maple Leaf Foods’ shares for the period compared with the total return of the S&P Food Index. If the total return of the
Maple Leaf Foods shares is below 75% of the total return of the comparative index for the relevant measurement period, none of the options
vest. At 75%, one-half vest. If performance falls between 75% and 100% a proportionate number will vest. On maturity, participants receive
one fully paid Maple Leaf Foods share for each vested RSU held. The units meeting the performance criteria on or before the first three years
vest at the end of year three while units meeting the performance feature in the years four and five vest at the end of year five. The RSUs
only vest fully on the distribution date, and an executive who ceases to be an employee prior to the distribution date forfeits the awards.
(4) Since 2006, all RSUs have been granted under the 2006 Plan. For each RSU granted, one share of Maple Leaf Foods is awarded on maturity
if Maple Leaf Foods’ performance equals the S&P Food Index. At 75% performance or less, one-half share of Maple Leaf Foods vests and
is awarded. At 125% performance, the maximum, one and a half Maple Leaf Foods shares, vest and are awarded. Vesting is prorated if Maple
Leaf Foods’ performance is between 75% and 100% or 100% and 125%. One-quarter of the number of units vest 18 months after grant and
that number of Maple Leaf Foods shares is distributed to holders. Three years following the date of grant all Maple Leaf Foods shares vesting
pursuant to the formula above, less the shares that vested and were distributed earlier, will vest and be distributed. The RSUs only vest fully
on the distribution date and an executive who ceases to be an employee prior to the distribution date forfeits the awards. The number of shares
shown in the table above is the maximum number of shares that will be distributed assuming the Maple Leaf Foods’ share price performance
exceeds the 125% maximum.
(5) The market payout value is based on:
(i) the share price of Maple Leaf Foods at December 31, 2008, $11.07; and,
(ii) the number of Maple Leaf Foods shares that will be distributed assuming that Maple Leaf Foods’ share price performance for all
performance periods ending after December 31, 2008 is below the 75% minimum described in footnotes 3 and 4 above.
(6) Mr. Maycock resigned from his position effective February 28, 2009.
2009 CANADA BREAD COMPANY, LIMITED MANAGEMENT INFORMATION CIRCULAR 17
RSU and Option Awards – Valued vested in the year
Option-Based Award –
Value Vested During
the Year
Share-Based Award –
Value Vested During
the Year(1)
$
Non-Equity Incentive Plan
Compensation – Value
Earned During the Year
$
–
–
–
–
–
604,530
339,930
182,760
76,597
51,000
–
–
–
–
–
Name
Lan, R.A.
Vels, M.H.
McLean, C.B.
Ménard, R.R.
Maycock, P.G.
Note:
(1) In 2008, RSUs granted on September 7, 2005 and November 1, 2006 vested in part and the shares were distributed to the participants. The
amount in the table reflects the value of the shares distributed using the average trading price of the shares on the date of distribution.
Pension/Retirement Plans
The Corporation, either directly or through designated subsidiaries, currently maintains a number of defined benefit and
defined contribution pension plans for its employees.
As noted in the footnotes to the Summary Compensation Table, Mr. Lan participates in a defined contribution 401(k) plan
of the Corporation, while Mr. Maycock participates in a group personal pension plan which is also a defined contribution
arrangement. Mr. McLean and Mr. Ménard are members of the Canada Bread defined benefit pension plans, while Mr.
Vels belongs to the Maple Leaf Foods defined benefit pension plans. Mr. Ménard also has credited years of service under
the Multi-Marques Inc. pension plan. Specific information pertaining to each of these pension plans is detailed below.
The accrued pension liability is calculated following the method prescribed by the Canadian Institute of Chartered
Accountants and is based on management’s best estimate of future events that affect the cost of pensions, including
assumptions about future salary adjustments. The amounts in the table are for defined benefit plan obligations. Changes
in the accrued pension liabilities for the NEOs are summarized in the following table. These changes include the fiscal
2008 expense attributed to service and compensation (see footnote (4) to the table below) as well as changes arising
from the annual valuation of the Corporation’s pension plans, which includes all employees who are participants (see
footnote (5) to the table below).
Defined Benefit Plans Table
Years of
Credited
Service(1)
Vels, M.H.
McLean, C.B.
Ménard, R.R.
17.5
8.2
9.3
Annual Benefits Payable
At Year End(2) At Age 65(3)
$
$
192,413
71,080
42,123
379,328
210,281
54,071
Accrued
Accrued
Obligation at
NonObligation at
January 1, Compensatory Compensatory December 31,
2008(6)
Change(4)
Change(5)
2008(6)
$
$
$
$
1,752,226
620,782
424,702
103,642
85,120
72,237
(370,487)
(135,103)
(36,566)
1,485,381
570,799
460,373
Notes:
(1) The number in this column is the number of years of credited service under the defined benefit arrangements as at December 31, 2008.
(2) This is the amount of pension the executive will be entitled to at retirement at year end and is based on the salary and years of credited
service earned to December 31, 2008. The actual pension the executive will receive may be higher (due to additional years of service after
2008 or increase in the average earnings) or lower if the executive elects to receive a longer period of guaranteed payments or if the pension
payable is paid on a joint survivor basis with a spouse.
(3) This is the amount of pension the executive will be entitled to at retirement at year end and is based on the salary to December 31, 2008
and years of credited service earned to the year in which the executive turns 65. The actual pension the executive will receive may be higher
(due to additional years of service after age 65 or increase in the average earnings after December 31, 2008) or lower if the executive elects
to receive a longer period of guaranteed payments or if the pension payable is paid on a joint survivor basis with a spouse.
(4) The amount in this column includes the service cost for the year as well as experience gains and losses arising from the executive’s salary
increase for the year being greater or lesser than the assumption used for the plan as a whole.
(5) The amount in this column includes interest on the beginning-of-year liability and contributions, as well as changes in interest rate
assumptions as the result of changes in long-term bond yields and changes in exchange rates.
(6) The calculation of reported amounts use actuarial assumptions and methods that are consistent with those used for calculating pension
liabilities and annual expenses as disclosed in the Corporation’s 2008 and 2007 consolidated financial statements. As the assumptions reflect
the Corporation’s best estimate of future events, the values shown in the above table may not be directly comparable to similar estimates
of pension liabilities that may be disclosed by other corporations. However, the figures in the table are calculated on the assumption that
the executive’s employment will terminate at the normal retirement age.
18 2009 CANADA BREAD COMPANY, LIMITED MANAGEMENT INFORMATION CIRCULAR
Defined Contribution Plans Table
Mr. Lan participates in the Corporation’s 401(k) plan for its US employees. Mr. Maycock participates in a Group Personal
Pension Plan for UK employees. The account maintained for Mr. Maycock, as with those for other employees in the UK,
is personal to Mr. Maycock and the Corporation’s involvement is limited to contributions. Accordingly, no information is
available or provided.
Name
Accumulated Value at
December 31, 2007(1)
Compensatory(2)
Non-Compensatory(3)
Accumulated Value at
December 31, 2008
378,242
9,807
(68,536)
319,513
382,797
9,200
(129,671)
262,326
Lan, R.A.
Supplemental Information:
In US$(1)
Notes:
(1) The pension account is held in US dollars and is translated to Canadian dollars at the appropriate exchange rate. The year end balances are
translated at the year end rates and the Corporation’s contribution at the average exchange rate for the year.
(2) The amount in this column includes the contribution made by the Corporation to the plan in respect of the executive.
(3) The amount in this column includes employee contributions together with investments earnings and changes attributable to the change to
the exchange rates during the year.
EMPLOYMENT CONTRACTS
The Corporation has entered into a contract of employment with Mr. P.G. Maycock effective June 1997 which was modified
on April 19, 1999. The contract contains the following provisions relating to termination of employment:
(i)
Notice of Termination of Employment
Each of the Company and the employee agree that the minimum period of notice of termination is 12 months. During
the notice period, the Company is not required to assign any duties or powers to the employee during the notice
period and may suspend the employee from active duty and not require him to attend for work. During the notice
period full salary, benefits and participation in the Company plans continues except that the employee is not entitled
to any bonus if the employer has suspended the employee from the active duties.
(ii) Termination of Employment without Notice
In certain events, the Company may terminate the employment on immediate notice without any compensation
except for salary and holiday pay accrued but unpaid. The circumstances include serious or repeated material default
of the obligations of employment, imprisonment or other circumstances that make the employee incapable of
performing the duties of employment.
The terms of employment are unaffected by any change of control of the Corporation. The provisions above are modified
by any statutory rights the employee may have.
2009 CANADA BREAD COMPANY, LIMITED MANAGEMENT INFORMATION CIRCULAR 19
REPORT ON CORPORATE GOVERNANCE
This Statement of Corporate Governance Practices has been prepared by the Governance Committee of the Board and has
been approved by the Board of Directors.
The Board of Directors and management of the Corporation are committed to maintaining a high standard of corporate
governance. The Board has responsibility for the overall stewardship of the Corporation and discharges such responsibility
by reviewing, discussing and approving the Corporation’s strategic planning and organizational structure and supervising
management with a view to preserving and enhancing the underlying value of the Corporation. Management of the business
within this structure is the responsibility of the Chief Executive Officer (“CEO”) and senior management.
The Board has adopted the guidelines and employs practices and procedures related to corporate governance matters,
which are summarized below:
BOARD RESPONSIBILITIES
1.
2.
3.
4.
5.
Board Mandate
The Board has responsibility for the stewardship of the Corporation and has adopted a formal mandate setting out
the Board’s stewardship responsibilities, including the Board’s responsibilities for the appointment of management,
strategic planning, monitoring of financial performance, financial reporting, risk management and oversight of the
Corporation’s policies and procedures, communications and reporting and compliance. A full copy of the Board’s
mandate is available on SEDAR (www.sedar.com) and is incorporated by reference into this Management
Information Circular.
Corporate Strategy
Management is led by the CEO who is responsible for the development of long-term corporate strategy, while the
role of the Board is to review, question, validate, and ultimately, after incorporating the Board’s suggestions to the
proposals of management, to approve the strategies of each division of the Corporation and the Corporation as a
whole. The process of strategy development is continuous and evolving and the Board receives periodic updates
from management on developments to the Corporation’s long-term strategy. On a rotating basis, the Board conducts
an in-depth review of each division’s operations, competitive positioning and strategy. At the time it reviews the
Corporation’s annual budget, the Board reviews the Corporation’s strategic plans.
The Board also reviews periodic updates of the Corporation’s progress on its strategic goals and makes major
decisions in the context of the strategic plan
Succession Planning
Management succession planning is an ongoing activity. The Board ensures that succession planning programs are
in place, including programs to appoint, train, develop and monitor management.
Board Communication with Stakeholders
The Corporation has adopted and follows a Disclosure Policy for the Corporation. The Board, or an appropriate
committee of the Board, reviews the content of the Corporation’s major communications to shareholders and the
investing public, including quarterly and annual reports, management’s discussion and analysis, proxy circulars, the
annual information form and any prospectuses.
The Board believes management should speak for the Corporation in its communications with the investment
community, the media, customers, suppliers, employees, governments and the general public. If communications
from stakeholders are made to the Chairman or other individual directors, management is informed and consulted
to determine any appropriate response.
Corporate Governance
The Governance Committee is responsible for developing and recommending improvements to corporate
governance guidelines, policies and mandates for implementation by the Board.
BOARD ORGANIZATION AND MEMBERSHIP
6.
Chairman of the Board
The Board has approved and periodically reviews a written position description for the Chairman which sets out the
responsibilities and accountabilities of the Chairman which include duties relating to setting Board meeting agendas,
chairing Board and shareholder meetings, and, together with the Chairman of the Governance Committee,
conducting director and Board assessments.
20 2009 CANADA BREAD COMPANY, LIMITED MANAGEMENT INFORMATION CIRCULAR
7.
8.
9.
10.
11.
Board Size and Selection of New Director Candidates
The maximum number of directors permitted by the Corporation’s Articles is 12 and the minimum number is five.
Within that range, the Board is authorized to establish the number of directors.
The Corporation’s largest shareholder, Maple Leaf Foods holds 89.8% of the outstanding shares which effectively
gives it control of the nomination process. The Chairman of the Board and the Governance Committee and its
Chairman, however, have led the process of new director nominations for independent directors in consultation with
Maple Leaf Foods. Each member of the Governance Committee is independent. Other directors are encouraged to
identify potential candidates for nomination.
Independence of Directors
Subject to the rights of the majority shareholder, at all times a sufficient number of independent directors are to be
nominated to represent the interest of other shareholders. The Board has defined an independent director to mean a
director who is not a member of management and is free from any interest, and any business, family or other
relationship which could, or could reasonably be perceived to, materially interfere with the director’s ability to act
with a view to the best interests of the Corporation.
A director shall not be considered to be independent if the director would not be considered independent under
director independence tests for Audit Committee membership under applicable securities laws.
The Board annually reviews the report of the Governance Committee on its review of the independence of each of
the non-management directors.
The following directors are considered to be “independent”:
W.E. Aziz
S.A. Everett
J.F. Petch
The following directors are considered to be “not independent” as they are executive officers of either the Corporation
or its 89.8% shareholder, Maple Leaf Foods, which provides management services to the Corporation:
G.W.F. McCain – Chairman of the Board of Maple Leaf Foods
M.H. McCain – Chairman of the Board of the Corporation and CEO of Maple Leaf Foods
J.S. McCain – President and COO, Agribusiness Group, Maple Leaf Foods
R.A. Lan – CEO of the Corporation and Chief Operating Officer, Foods Group, Maple Leaf Foods
M.H. Vels – CFO of the Corporation and Maple Leaf Foods Inc.
Term Limits for Directors
The Board values the increased insight into the Corporation and its strategy and operations that directors develop
and the increased contribution that directors make over a long period of service. For this reason, the Board has not
established fixed term limits as it would have the effect of forcing off the Board directors who have developed these
insights. To ensure continued effectiveness of each director, the Board relies on its performance evaluation process.
Composition of the Board
Annually, the Governance Committee reviews the competencies, skills and personal qualities of candidates to be
considered for nomination to the Board. The objective of this review is to maintain the composition of the Board in
a way that provides, in the judgment of the Board, the best mix of skills and experience to provide for the overall
stewardship of the Corporation. The Governance Committee takes into account the desirability of maintaining a
reasonable diversity of personal characteristics such as age, gender, geographic residence and origin. However, all
directors must possess the highest personal and professional ethics, integrity and values and be committed to
representing the long-term interests of the shareholders. They must also have an inquisitive and objective perspective,
practical wisdom and mature judgment, outstanding ability in their individual fields of expertise and a willingness
to devote necessary time to Board matters.
Director Orientation and Education
The Governance Committee is responsible for the orientation and education of new directors as well and the
continuing education of existing outside directors. A standard template has not been developed as the skills,
knowledge of the Corporation and the industry and background of each new director will in large measure determine
the nature and intensity of the orientation and education. The Committee oversees the continuous education of
directors on the Corporation’s various operational units, functional areas and other areas of interest to the directors.
This is accomplished with a program of regular presentations, briefings and plant visits.
2009 CANADA BREAD COMPANY, LIMITED MANAGEMENT INFORMATION CIRCULAR 21
BOARD COMMITTEES AND TERMS OF REFERENCE
12.
13.
14.
Board Committees
The Board has established two Board committees: (i) the Audit Committee; and (ii) the Governance Committee.
This structure may change as the Board considers from time to time which of its responsibilities can best be fulfilled
through a detailed review of matters at the committee level. Each committee operates according to a Board-approved
written charter outlining its duties and responsibilities. A written set of procedures and policies set out the role of
the committee chairman.
The purpose of Board committees is to assist the Board in discharging its responsibilities. Notwithstanding the
delegation of responsibilities to a Board committee, the Board is ultimately responsible for matters assigned to each
committee for its determination. Except as may be explicitly provided in the charter of the committee or a resolution
of the Board, the role of the Board committee is to review and make recommendations to the Board with respect to
the approval of matters considered by the committee.
Membership of Committees
The Board has determined that each committee shall be composed entirely of independent directors. In addition, all
members of the Audit Committee shall be financially literate within the meaning of applicable securities laws.
After receipt of recommendations from the Governance Committee, the Board appoints the members of the
committees annually, and as necessary to fill vacancies, and generally appoints the chair of each committee. Members
of the committees hold office at the pleasure of the Board.
The Committees’ members and year first appointed are as follows:
Audit Committee
Governance Committee
W.E. Aziz, as Chairman
2005
J.F. Petch, as Chairman
1995
J.F. Petch, and
2008
W.A. Aziz, and
2008
S.A. Everett
1995
S.A. Everett
1995
Committee Mandates
In summary, the responsibilities and functions of each committee is as follows:
Audit Committee
a)
To assist the Board of Directors of the Corporation by reviewing the adequacy and effectiveness of
financial and reporting processes including:
(i) the systems of internal and financial controls;
(ii) the selection of accounting policies and principles;
(iii) the preparation and audit of financial reports;
(iv) the review of treasury risk management functions;
(v) the oversight of the stewardship of the Corporation’s pension plan funds and report to the Board;
and
(vi) the monitoring of certain other financial matters.
b)
To oversee and monitor the appointment, independence and performance of the internal and external
auditors.
c)
To establish and monitor procedures for handling of concerns and complaints related to financial matters.
d)
To approve, on behalf of the Board of Directors, certain financial and other matters as delegated by the
Board.
e)
To review and make recommendations for approval of annual financial statements, management’s
discussion and analysis of the financial condition of the Corporation and the results of its operations for
release to shareholders.
f)
To review and approve the interim financial statements, management’s discussion and analysis of the
financial condition of the Corporation and the results of its operations for release to shareholders.
g)
To conduct independent investigations into matters which may come under its scope of responsibilities.
22 2009 CANADA BREAD COMPANY, LIMITED MANAGEMENT INFORMATION CIRCULAR
Governance Committee
a)
Human Resource Matters
1.
To review and to recommend changes with respect to compensation of employees, with a view to
ensuring that the necessary policies and processes are in place by which all employees will be
fairly and competitively compensated.
2.
To evaluate the performance of the Chief Executive Officer (“CEO”) annually, to receive the
Chairman’s recommendation for changes to his compensation and to make recommendations to
the Board of Directors.
3.
To review the CEO’s evaluation of the performance of the other executive officers of the
Corporation and its major subsidiaries annually and the CEO’s recommendations with respect to
the amount of compensation to be paid to the other executive officers.
4.
To assist in ensuring that appropriate human resource development, succession planning and
performance evaluation programs are in place and that they are operating effectively.
5.
To assist the Board in its responsibilities regarding the benefits under the Corporation’s pension
plans and to make recommendations to the Board for amendments.
b)
Corporate Governance Matters
1.
To assist the Board of Directors, in conjunction with the Chairman, in matters pertaining to the
Corporation’s approach to governance issues and disclosures.
2.
To assist the Board of Directors, in conjunction with the Chairman, if any, in matters pertaining
to the organization and staffing of the Board of Directors, the organization and conduct of Board
meetings and to the effectiveness of the Board of Directors in performing and fulfilling its
responsibilities.
3.
To assist the Board of Directors in matters pertaining to the delegation of responsibilities to Board
committees by reviewing periodically the terms of reference for Board committees and making
recommendations to the Board of Directors for any amendments deemed necessary or advisable.
4.
To assess the independence of individuals nominated for director.
5.
To assess the effectiveness of the Board, the committees and the individual members thereof.
c)
Environmental Matters
1.
To review, on behalf of the Board, the Corporation’s efforts to meet its objective of being a good
corporate citizen with respect to the well-being of the environment including avoiding nuisance,
or damage to the environment.
2.
To assist in ensuring (a) that the Corporation has appropriate environmental policies having regard
to legislative and regulatory requirements and industry standards in those areas and (b) that the
Corporation has and maintains management systems to implement such policies.
d)
Product Safety Matters
1.
To review, on behalf of the Board, the Corporation’s efforts to ensure the safety of its products
including ensuring (a) that the Corporation has appropriate policies having regard to legislative
and regulatory requirements and industry standards in those areas and (b) that the Corporation has
and maintains management systems to implement such policies.
e)
Health And Safety Matters
1.
To review, on behalf of the Board, the Corporation’s efforts to meet its objective of protecting
employee health and safety, including the health and safety of other persons.
2.
To assist in ensuring (a) that the Corporation has appropriate health and safety policies having
regard to legislative and regulatory requirements and industry standards in those areas and (b) that
the Corporation has and maintains management systems to implement such policies.
BOARD MEETINGS AND MATERIALS
15.
Functioning of the Board
The Governance Committee, together with the Chairman of the Board, is responsible for assessing and
recommending changes to ensure the Board carries out its objectives effectively and operates independently of
management.
2009 CANADA BREAD COMPANY, LIMITED MANAGEMENT INFORMATION CIRCULAR 23
16.
17.
Meeting Agendas, Materials and Attendance of Non-Directors
Procedures are in place governing the conduct of meetings, including among other things, agendas, distribution of
briefing materials and attendance of non-directors at meetings. These procedures are followed to promote informed
and effective consideration of the matters on the agenda. Other senior managers attend each Board meeting to provide
information and opinions to assist the directors in their deliberations.
In Camera Meetings
At the request of any director and at least annually, and at the start of each regularly scheduled meeting, the
independent directors meet in camera without management or the non-independent directors present. The Chairman
of the Governance Committee acts as Chairman of these meetings. Since the commencement of the last completed
fiscal year there have been three (3) in camera meetings.
DIRECTOR COMPENSATION AND SHARE OWNERSHIP
18.
Director Compensation
The Board has determined that the directors should be compensated in a form and amount which is appropriate and
which is customary for comparable companies, having regard for such matters as time commitment, responsibility
and trends in director compensation.
The Governance Committee reviews the compensation of the directors annually. The Governance Committee review
includes consideration of all forms of compensation that a director receives, directly or indirectly. Directors are
encouraged to use all or a portion of their annual fees to purchase shares of the Corporation.
BOARD’S RELATIONSHIP WITH MANAGEMENT
19.
20.
21.
22.
Board Relationship with Management
Management shall make appropriate use of the Board’s skills before decisions are made on key issues. The
Governance Committee shall review and assess the Board’s relationship with management.
Limits to Management Authority
As required by the Corporation’s by-laws, the Board has established general authority guidelines that place limits
on management’s approval authority depending on the nature and size of the proposed transaction. These limits
provide for some flexibility within approved budgets but require that transactions outside defined limits be approved
by the Board or an appropriate committee.
Evaluation of the Chief Executive Officer
The Governance Committee conducts an annual review of the performance of the Chief Executive Officer against
a written position description and the goals and objectives that have been established by the Committee and reviews,
assesses and recommends the compensation of the Chief Executive Officer to the Board for approval. The results
of the review are communicated to the Chief Executive Officer by the Chair of the Governance Committee.
Director Access to Management
All directors are to have open access to the Corporation’s senior management for relevant information. Individual
directors are encouraged to make themselves available for consultations with management outside Board
meetings in order to provide specific advice and counsel on subjects where such directors have special knowledge
and experience.
DIRECTOR RESPONSIBILITIES AND PERFORMANCE
23.
24.
Director Responsibilities
Directors are expected to use their skill and experience to provide oversight to the business of the Corporation.
Directors have a duty to act honestly and in good faith with a view to the best interests of the Corporation and to
exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances.
Directors are expected to attend all Board and committee meetings in person (or by telephone). In circumstances
where a director is unable to do so, he or she has the opportunity to communicate his or her views that are then
shared with the full Board. A summary of the attendance record of each director at Board and committee meetings
in 2008 is detailed on page 25.
Outside Advisors for Individual Directors
The Board has determined that any director who wishes to engage a non-management advisor to assist on matters
involving his or her responsibilities as a director at the expense of the Corporation should review the request with,
and obtain the authorization of the Governance Committee. This pre-approval requirement does not limit the
authority of the Audit Committee to engage consultants or advisors on matters of financial reporting.
24 2009 CANADA BREAD COMPANY, LIMITED MANAGEMENT INFORMATION CIRCULAR
25.
Assessment of Board and Individual Director Performance
The Governance Committee periodically assesses the effectiveness of the Board through discussions and surveys.
Informally, the performance and contribution of individual directors is assessed by the Governance Committee. The
Committee has adopted a formalized program of periodic directors’ assessment with a view to improving
effectiveness, consisting of a self-assessment by individual directors followed by an interview with the Chairman
of the Board and Chairman of the Governance Committee. The overall results and conclusions are shared with the
full Board of Directors.
ETHICS AND CONFLICTS OF INTEREST
26.
27.
28.
29.
Ethical Behaviour
The Board takes all steps to assure itself of the ethics and integrity of the CEO and the executive officers and ensure
that the appropriate “tone-at-the-top” for ethical conduct is established.
Code of Business Practice
The Board expects directors, officers and employees to act ethically at all times and to acknowledge their adherence
to the policies comprising the Code of Business Conduct which the Corporation together with its parent company,
Maple Leaf Foods, adopted in 1999. Each year, every employee is required to reaffirm in writing his or her adherence
to the Code of Business Conduct concurrent with his or her performance review. New employees are given a copy
of the Code upon joining the Corporation. Copies are available from the Corporation at 10 Four Seasons Place,
Toronto, Ontario M9B 6H7 and are also available on SEDAR at www.sedar.com.
An “Ethics Committee” comprised of management personnel for the Corporation and Maple Leaf Foods, reviews
and addresses issues of interpretation of the Code raised by employees and proposes changes to the Code. The Ethics
Committee reports on its activities to the Governance Committee.
Whistle-blower Procedures
The Corporation has set up a whistle-blower hotline named the EthicsLine. The EthicsLine provides employees an
avenue to raise concerns such as fraud, accounting irregularities, kickbacks, product tampering or other issues. The
process was designed to reassure complainants that they will be protected from reprisals or victimization when
reporting concerns in good faith. All calls are recorded and logged at an independent call centre and the incidents
reported are tracked and resolved using the case management system. The Audit Committee reviews reports on the
calls and their resolution on a quarterly basis.
Conflicts of Interest
In addition to the statutory responsibilities of directors to disclose all actual or potential conflicts of interest and
generally to refrain from voting on matters in which the director has a conflict of interest, the director is required to
declare his or her interest in the matter to be discussed and shall recuse himself or herself from any discussion or
decision on any matter in which the director is precluded from voting as a result of a conflict of interest or which
otherwise affects his or her personal, business or professional interests.
RECORD OF DIRECTOR ATTENDANCE AT BOARD AND COMMITTEE MEETINGS
The attendance record of each director at Board and committee meetings in 2008 was as follows:
Audit
Committee
Number of meetings held
W.E. Aziz
J.L. Bragg (1)
S.A. Everett
J.F. Petch
R.A. Lan
G.W.F. McCain
J.S. McCain
M.H. McCain
M.H. Vels
Attendance
Attendance percentage
6
6/6
5/6
6/6
17/18
94.4%
Board
8
8/8
6/8
8/8
8/8
8/8
8/8
8/8
8/8
7/8
69/72
95.8%
Governance
Committee
4
3/4
4/4
4/4
11/12
91.7%
Total
18
14/14
14/18
18/18
12/12
8/8
8/8
8/8
8/8
7/8
97/102
95.1%
Attendance
Percentage
100.0%
77.8%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
87.5%
95.1%
Note:
(1) Mr. Bragg resigned from the Board of Directors of the Corporation on December 16, 2008.
2009 CANADA BREAD COMPANY, LIMITED MANAGEMENT INFORMATION CIRCULAR 25
OTHER MATTERS
SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS
The following table provides information as at December 31, 2008 with respect to Common Shares authorized for issuance
under the Canada Bread Company, Limited incentive stock option plan.
Equity Compensation Plan Information as at December 31, 2008
Plan Category
Equity compensation plans
approved by securityholders
Equity compensation plans not
approved by securityholders
Total
Number of securities to be
issued upon exercise of
outstanding options,
warrants and rights
Weighted-average exercise
price of outstanding
options, warrants and rights
(a)
(b)
Number of securities
remaining available for
future issuance under equity
compensation plans (excluding
securities reflected in column (a))
(c)
—
—
303,000
—
—
—
—
—
303,000
On January 30, 1985, the directors established an incentive stock option plan for the Corporation (the “Plan”) which was
approved by shareholders. The Plan, as amended on February 8, 1995, permits the directors to grant options to full-time
employees of the Corporation or its affiliates to purchase the Corporation’s unissued Common Shares. The Plan provides
that the option price is based on the average of the ten (10) days’ closing price of the Common Shares on the Toronto Stock
Exchange preceding the date of grant. Options under the Plan expire ten years from the date of grant, 270 days following
the death of any employee, 90 days following the termination of employment of the optionee or 270 days following the
retirement of the optionee under a retirement plan of the Corporation or any affiliated company or such longer period as
the directors, in their discretion, determine. The options, at the discretion of the Board may be subject to staged vesting
over a period of up to five years.
Options to be issued under the Plan will be exercisable only upon full payment, in cash, of the option price. Any options
issued under the Plan are embodied in written instruments containing provisions, among others, relating to anti-dilution.
There have been no option grants under this plan since 1995 and there is no present intention to make additional grants.
DIRECTORS’ AND OFFICERS’ LIABILITY INSURANCE
Directors’ and officers’ liability insurance has been arranged through the Corporation’s controlling shareholder, Maple
Leaf Foods. The Corporation’s share of the annual premium cost for the year ended December 31, 2008 was $29,181. This
amount was not allocated as between officers and directors. The insurance limit under the policy is $50,000,000 for each
loss and each policy year with the Corporation subject to a $100,000 deductible provision. The directors and officers are
not liable for any payment under a deductibility clause or payment of any premium.
INTERESTS OF INSIDERS
Reference should be made to the heading “Voting Securities and Principal Holders Thereof” for details of Maple Leaf
Foods’ shareholdings in the Corporation. Messrs. Lan, G.W.F. McCain, J.S. McCain, M.H. McCain and M.H. Vels are
directors of the Corporation and are also officers and/or directors of Maple Leaf Foods.
In August 1995, the Corporation entered into a Management and Affiliation Agreement and in October 1995, a Management
Services Agreement effective January 1, 1996, with Maple Leaf Foods whereby the Corporation benefits from certain
services provided by Maple Leaf Foods. These agreements were reviewed and approved by a committee composed of
independent members of the Board of Directors. Annually, the Audit Committee reviews the charges and budgets for the
following year and makes recommendations to the independent members of the Board of Directors.
26 2009 CANADA BREAD COMPANY, LIMITED MANAGEMENT INFORMATION CIRCULAR
Under the Management Services Agreement, Maple Leaf Foods provides the Company with certain management services
including treasury and cash management, taxation, internal audit, accounting, external financial reporting, investor
relations, marketing and consumer affairs services, public relations, corporate secretarial, legal services, insurance, human
resources, provision of stock awards programs, Six Sigma and access to senior Maple Leaf management time for operating
involvement, merger and acquisition transactions, information system services, engineering services, and access to bulk
purchasing programs. Fees paid to Maple Leaf in 2008 for these services were $30.3 million (2007: $25.3 million).
GENERAL
Except where specifically stated, information contained herein, is given as of March 10, 2009.
ADDITIONAL INFORMATION
Additional documents, including copies of the most recent Annual Information Form (including any documents
incorporated by reference therein) of the Corporation, the Annual Report including the audited financial statements and
management’s discussion and analysis of the Corporation for its most recently completed financial year, interim financial
statements of the Corporation and the Management Information Circular of the Corporation in respect of its most recent
Annual Meeting of shareholders, are available upon request from the Secretary, 10 Four Seasons Place, Toronto, Ontario
M9B 6H7.
The above information and additional information relating to the Corporation is available on SEDAR at www.sedar.com.
APPROVAL
The contents and the sending of this Management Information Circular have been approved by the directors of the
Corporation.
DATED at Toronto, Canada this 27th day of March, 2009.
R. Cappuccitti
Corporate Secretary
2009 CANADA BREAD COMPANY, LIMITED MANAGEMENT INFORMATION CIRCULAR 27